TSX golden as com­modi­ties ad­vance


The Toronto stock mar­ket soared to its big­gest gain since late Au­gust on Wed­nes­day, pow­ered by higher com­mod­ity prices, par­tic­u­larly oil and gold, and a solid re­port on man­u­fac­tur­ing. The S&P/TSX in­dex closed up 301.07 points, or 2.24 per cent, at 13,763.78, adding to a 109-point gain on Tues­day.

The big ad­vance came as the Oc­to­ber con­tract for bench­mark crude oil shot up $2.56 (U.S.) to $47.15 a bar­rel and De­cem­ber gold re­bounded from its re­cent slide, up $16.40 to $1,119.00 an ounce.

The gold and oil sec­tors were the lead­ing ad­vancers on the TSX, up 5.53 and 5.25 per cent, re­spec­tively.

De­cem­ber cop­per rose 2.5 cents to $2.45 a pound, while Oc­to­ber nat­u­ral gas fell seven cents to $2.66 per thou­sand cu­bic feet.

The Cana­dian dol­lar ad­vanced 0.43 of a cent (U.S.) to 75.92 cents.

The U.S. Fed­eral Re­serve will an­nounce Thurs­day whether it will stand pat on in­ter­est rates — at his­toric lows near zero since the re­ces­sion — or be­gin hik­ing them for the first time in al­most a decade.

Opin­ion is di­vided on which way the cen­tral bank will go amid un­even progress in the U.S. eco­nomic re­cov­ery. On Tues­day, the Fed is­sued a dis­ap­point­ing re­port on U.S. man­u­fac­tur­ing, say­ing it fell .05 per cent in Au­gust, its big­gest de­cline since Jan­uary 2014 as Amer­i­can man­u­fac­tur­ers con­tinue to face a num­ber of head­winds, in­clud­ing a high U.S. dol­lar.

There was much bet­ter news north of the bor­der on Wed­nes­day, with Sta­tis­tics Canada re­port­ing man­u­fac­tur­ing sales rose 1.7 per cent to $52.2 bil­lion in July, well above the con­sen­sus es­ti­mate of a 1-per-cent in­crease.

Ian Nakamoto, di­rec­tor of re­search at 3MACS, noted that the Bank of Canada has been count­ing on the lower Cana­dian dol­lar help­ing man­u­fac­tur­ing ex­ports.

“So if traders take that as pos­i­tive, then (it’s) one of the rea­sons prob­a­bly why the Cana­dian dol­lar is strength­en­ing against the U.S. dol­lar,” he said. How­ever, he said, most eyes re­main fo­cused on the Fed.

“I think the rally here is peo­ple don’t ex­pect an in­ter­est in­crease and so we have this con­tin­u­ing liq­uid­ity out there.”

How­ever, he said the rally could be short-lived even if rates don’t go up, and his pref­er­ence would be for the Fed to in­crease rates by 25 ba­sis points and “say we’re go­ing to go slow here in terms of data de­pen­dence.

“If there is a sense that the econ­omy is turn­ing around and the Fed is putting its stamp of ap­proval by in­creas­ing rates slightly, but not so quickly in fu­ture, I think the mar­kets can con­tinue to rally here.”

In cor­po­rate news, An­heuserBusch InBev dis­closed it has made a takeover ap­proach to SABMiller PLC. A com­bi­na­tion of the two would cre­ate a mas­sive con­glom­er­ate worth roughly $275 bil­lion.

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